Business sentiment in Britain’s services sector took a notable turn this quarter, with firms that serve other businesses reporting a sharp improvement, according to the Confederation of British Industry (CBI). The quarterly survey found that optimism in the business and professional services segment climbed to -3 in February from -50 in November, marking the highest reading since August 2024.
By contrast, consumer-facing service firms reported persistently weak sentiment. Optimism for consumer services remained deeply negative at -45, a marginal improvement from -47 in November. That gap between the two parts of the services market highlights a split recovery within the sector.
What the survey shows
The CBI’s data point to a divergence between firms serving corporate clients and those reliant on consumer spending. Charlotte Dendy, the CBI’s economic surveys and data manager, cautioned that with “little sign of improvement in consumer services, overall momentum is likely to remain weak - weighing on investment and employment prospects.”
The survey collected responses from 351 firms between January 27 and February 12.
Complementary consumer data
Separate figures from the British Retail Consortium (BRC), also released on Thursday, offered a tentative sign of consumer mood improvement. The BRC said consumer sentiment rose to its highest level since June 2025, based on an Opinium poll of 2,000 adults. BRC Chief Executive Helen Dickinson described the rise in confidence as “encouraging, but fragile,” noting that slow growth and rising unemployment continue to weigh heavily on the economy.
Broader macro backdrop
The survey and polling results arrive against a background of mixed macroeconomic signals. Earlier this month the Bank of England lowered its growth forecast for 2026 to 0.9% from 1.2%. Finance minister Rachel Reeves is due to present fresh government forecasts from the Office for Budget Responsibility on Tuesday. At the same time, unemployment is close to a 10-year high and wage growth is slowing from the rapid rates seen in recent years.
Purchasing managers’ data have shown a pick-up in business activity since the start of the year, and many expect a fall in inflation back to target in April, a development that is widely seen as likely to limit further damage to living standards.
Policy and business concerns
Businesses have been sensitive to fiscal announcements in recent budgets. Past budget statements from the finance minister have weighed on sentiment, particularly after a large rise in employment taxes announced in October 2024. Reeves has indicated she does not plan to announce tax changes on Tuesday, but firms remain concerned about pending employment legislation.
The CBI said companies worry about new rules that will make it harder to dismiss staff and that will guarantee hours for some part-time employees. Dendy said service sector firms want the government to continue to find “appropriate landing zones on the Employment Rights Act and accelerating cuts to the regulatory burden - both critical to tackling the high cost of doing business.”
Data sources
The CBI survey underlying the services readings drew on 351 firm responses collected between January 27 and February 12. The BRC consumer sentiment figure is based on an Opinium poll of 2,000 adults.
Overall, the latest readings present a split picture: a strong rebound in business and professional services sentiment alongside sustained weakness among consumer-facing service firms, set against downgraded official growth projections, elevated unemployment and slowing wage growth.